NATIONALISATION

NSE extends suspension of KQ share for another nine months

The Nairobi bourse attributed the extension to the delayed nationalisation process

In Summary
  • This will be the second extension after the first one was approved last September for six months.
  • The plan seeks to redeem the KQ which recently reported the worst-ever results in the financial year ended December 31, 2020. 
KQ
KQ
Image: COURTESY

The Nairobi Securities Exchange has extended the suspension from trading Kenya Airways shares for another nine months as the airline prepares for a government buyout.

 A statement from the Nairobi bourse attributed the extension to the delayed nationalisation process of KQ as it is known internationally.

''The company is yet to finalise on its operational and corporate restructure for the eventual government buy-out, following the publication of the National Management Aviation Bill, 2020, on 18th June 2020,'' the NSE statement read in part.

The suspension was approved and issued by the Capital Markets Authority (CMA) pursuant to section 11(3) (w) of the Capital Markets Act and regulation 22 of the Capital Markets (Securities)(Public Offers, Listings and Disclosures) Regulations, 2002.

This will be the second extension after the first one was approved last September for six months.

This was after the bourse suspended the trading of the airline's share for three months in July after the nationalisation Bill was tabled in Parliament. 

The draft law seeks to establish the Kenya Aviation Corporation, a holding company that will house Kenya Airways, National Aviation Council, and the Kenya Airports Authority.

According to the proposed law sponsored by the immediate former leader of Majority in Parliament Aden Duale, KAC will have shares in entities and will borrow and lend funds to subsidiaries and oversee the purchasing and disposal of movable and immovable assets for the group.

The government had targeted to complete the process end of October last year but a section of MPs blocked the legislation in September owing to lack of public participation.

Under the proposed law, KQ will have all the powers necessary for the proper performance of its functions or as may be assigned by the KAC board.

The initial share capital of KQ will be Sh7.48 billion divided into 74,823,452 ordinary shares as may be varied from time to time in accordance with the provisions of the Companies Act, 2015 while that of KAA will be Sh66 billion divided into 66 million ordinary shares.

The proposed law also creates Aviation Investment Corporation to carry businesses in relation to aviation training schools.

The plan seeks to redeem the KQ which recently reported the worst-ever results in the financial year ended December 31, 2020. 

The airline's loss nearly tripled to Sh36.2 billion on account of Covid-19 disruptions that led to a sharp decline in passenger numbers.